If you are considering an investment in real estate, now is a perfect time.  Warren Buffett predicts a rampant rise in inflation, which means higher rents and higher home prices over the next 5 years.   Throw in historic price declines, fixed rate mortgages at 4.5 percent and an $8000 tax credit and the timing has never been better for investors.

If your long term investment plans include snapping up some deals, you need to know the difference in properties that that structural problems versus those that need cosmetic repairs.

Structural damage refers to problems with foundation cracks, fire damage, mold, dry rot, water penetration and sagging floors.   Homes with this type of damage are risky investments because the costs to repair will be hard to predict until tear down is done and work begins.   Repairing structural issues also mean that city inspector’s will be involved with the rehab, which can add lenghty delays and costs to the project.  

Why6 Advice:  With all the inventory on the market, investors should avoid homes with structural problems.  In addition to the unknown costs and timeframes that are involved, homes with past structural problems will always be more difficult to resell.

Cosmetic Repairs include minor things like updating.  Typical cosmetic repairs cover things like door knobs, putting in new windows or shutters, landscaping, repainting.   This type of rehab updates or alters the look of the home in an attempt to broaden the appeal.   Cosmetic changes are not required and the do not involve city authorities.

Why6 Advice:   Investor’s should search for outdated or neglected property that can be improved with low cost, do it yourself type repairs that don’t require specialized workers.    These are the types of properties that investors will not get stuck with as they wait for inflation to take rents and prices higher.

Thank you for visiting Why 6 Percent.   We have an MLS and Realtor.com program for ‘by owners’, investors and home builders that exposes your property to millions of homebuyers and thousands of Realtors each month.  Call 1-800-381-9496 or visit our website for details.

1. Greenville SC Builders says:

   November 17, 2009 at 12:12 pm

   Great post. I’m hoping to incorporate more of these stories into my own real estate blog. Thanks.

   Anna
2. mike says:

   March 2, 2010 at 7:20 pm

   We really need to encourage investors to contunue to rehad the areas hardest hit by foreclosures. We offer free structural inspections for the investors in our area to ensure they are buying properties that will offer them the best opportunity to make a profit.